Salamanca uranium project fully financed

31 August 2017

The Sultanate of Oman is to become a long-term strategic investor in Berkeley Energia through an investment agreement worth up to $120 million. The investment means that the Salamanca uranium project in western Spain is now fully funded and can proceed to production.

Infrastructure work began at Salamanca in 2016 (Image: Berkeley Energia)

The agreement with the State General Reserve Fund (SGRF) - the sovereign wealth fund of Oman - was announced yesterday by UK-based Berkeley and comprises two elements: a $65 million investment in a convertible loan that will give the fund a 28% share of the company; and an option package worth $55 million, which would allow the fund to purchase a further 9% share.

Berkeley chief commercial officer Hugo Schumann said the convertible loan fully finances construction at the Retortillo deposit, while the option package would provide capital to fund later stages of development at the mine.

The agreement also gives the SGRF the right to match future uranium offtake transactions. If Berkeley enters into a long-term contract the government of Oman will be given the chance to match it, effectively doubling such sales, Schumann said. "Ideally they'll place that material into the Middle East, to a high quality utility," he said.

Berkeley Managing Director Paul Atherley welcomed the fund as a long-term strategic investor and said the fund's interest in matching future offtake contracts would further enhance the company's revenue stream. An off-take agreement for the sale of the mine's first output, signed last year with privately-funded commodity trading company Curzon Resources, was approved by the Euratom Supply Agency in March.

The SGRF acts on behalf of the government of Oman in managing and investing the financial surplus achieved by the state from its oil and gas revenues. Tim Keating, SGRF private equity manager, said the Salamanca mine matched the fund's investment criteria of being a long-life, low-cost mine development opportunity with "outstanding" economic fundamentals. "We are excited to partner with the Berkeley Energia team to unlock the full potential of the Salamanca project," he said.

The Salamanca project has 59.8 million pounds U3O8 (23,000 tU) of measured and indicated resources as well as inferred resources of 29.6 million pounds of U3O8. According to a definitive feasibility study published by Berkeley last year, it would be capable of producing an average of 4.4 million pounds of uranium per year at a cash cost of US$13.30 per pound over an initial ten-year period.

Development began at the site last year with infrastructure work. Atherley said production is expected to begin around the end of 2018 or early in 2019.